PG&E bankruptcy case keeps getting more complex

1of2An American flag flies at a home destroyed by last week's destructive Tubbs Fire on Walnut Grove Street in the Coffey Park neighborhood of Santa Rosa, Calif. on Wednesday Oct. 18, 2017.Photo: Paul Chinn / The Chronicle

2of2Figuring out PG&E’s liabilities for the 2018 Camp Fire and other blazes will be challenging.Photo: John Locher / Associated Press 2018

PG&E Corp.’s bankruptcy is growing increasingly complicated as it grapples with the case’s most pivotal question: How much money does the company owe victims of wildfires its equipment started?

Aspects of the case are now advancing in three San Francisco courts while attorneys for PG&E and fire victims appear to be billions of dollars apart. All sides face pressure from a new state law to get the huge bankruptcy resolved by the end of June.

The company and subsidiary Pacific Gas and Electric Co. remain in U.S. Bankruptcy Court. But, per the direction of U.S. Bankruptcy Judge Dennis Montali, a U.S. District Court judge will hold proceedings to determine the total amount of PG&E’s obligation to victims from numerous wildfires. PG&E faces many personal injury or wrongful death claims, and federal law requires a District Court to decide how much those victims are ultimately paid.

Montali could be empowered by the District Court judge to estimate PG&E’s fire liabilities for the sole purpose of approving a bankruptcy reorganization plan, said UC Hastings law professor Jared Ellias. That could allow PG&E to resolve its bankruptcy case before the District Court proceedings are over, Ellias said.

Wildfire victims’ lawyers think they can nonetheless convince a jury that PG&E was responsible, and they have their first date in San Francisco Superior Court next month, attorney Frank Pitre said Tuesday. Montali previously said the Tubbs Fire trial could go forward on a “parallel track” to the other bankruptcy proceedings.

On Tuesday, Montali heard updates from various attorneys involved in the PG&E case about the estimation of the company’s fire liabilities. Their comments underscored both the gravity of the proceedings and the amount of ground they have to cover in the next 10 months.

Cecily Dumas, an attorney representing a committee of fire victims involved in the case, suggested that the claims may be worth in excess of $40 billion. PG&E said when it filed for bankruptcy protection in January that its liabilities could top $30 billion, but its attorneys have indicated they will not concede responsibility for every claim the victims’ attorneys are pursuing.

Dumas said “everybody in the room realizes that PG&E doesn’t have more value than it has” and her clients are not trying to “say our number is $40 billion or $80 billion and deal with it.” But she expressed concern that PG&E’s “all out” strategy of fighting “every issue on every fire” could further frustrate the process.

A state law passed last month requires PG&E to resolve its bankruptcy by June 30 in order to access a new fund created to protect the company and other electric utilities from future wildfire costs. PG&E has already reached a $1 billion settlement with various local governments but it still faces many more claims from a host of insurance companies and individual victims.

Kevin Orsini, an attorney representing PG&E, told Montali that valuing the individuals’ claims will be “the hardest part of this whole case.” Orsini criticized Dumas’ committee for “backing into a number” about how much PG&E owes, and he said the estimation process will require victims’ lawyers to “show what their claims are worth” — not what the company can pay.

U.S. District Court Judge James Donato has set his first court date regarding the PG&E fire liability proceedings for Sept. 10.

J.D. Morris is a business reporter covering energy, including PG&E, Tesla and California’s clean power initiatives.

Before joining The Chronicle, he was the Sonoma County government reporter for the Santa Rosa Press Democrat, where he was among the journalists awarded a Pulitzer Prize for their coverage of the 2017 North Bay wildfires.

He was previously the casino industry reporter for the Las Vegas Sun. Raised in Monterey County and Bakersfield, he has a bachelor’s degree in rhetoric from UC Berkeley.